Interview: Khalid Al Sharif, CEO, Abdul Latif Jameel Finance, on leveraging digital and sharia-compliant solutions for financial inclusion
How can non-bank financial institutions (NBFIs) deepen participation and expand access in debt and sukuk (Islamic bonds) markets?
KHALID AL SHARIF: NBFIs have filled critical gaps, especially for small and medium-sized enterprises for which audited financials and formal documentation are often limited. NBFIs’ closer engagement with small businesses allows them to apply alternative assessment methods and tailor financing more effectively. Microfinance remains underdeveloped due to its high-risk nature and high small-business attrition rates. Institutions operating in this space rely on proximity to clients and non-traditional approaches, incorporating qualitative assessments of business practices and cash-flow patterns for segments lacking formal financial records.
In what ways can digitalisation and artificial intelligence (AI) accelerate development?
AL SHARIF: Digitalisation and AI are reshaping the entire lending cycle while playing a central role in expanding financial inclusion. Customers with limited or no credit history can now be assessed through alternative data such as payment behaviour, demographic indicators and transactional patterns, broadening the borrower base and reducing information asymmetry. Advanced analytics and AI-driven credit models further refine risk assessment by integrating behavioural data, economic signals and geospatial variables. Transparency has also improved through regulatory enablers like the open-banking framework and data-protection legislation. Open banking reduces banks’ historical data advantage and allows NBFIs, with customer consent, to incorporate standardised financial data into their decisions, promoting more equitable competition.
What role can sharia-compliant finance play in expanding the pipeline of issuers and investors?
AL SHARIF: Sharia-compliant financing products add credibility and strong governance due to their rigorous structural requirements and oversight. This enhances investor trust and supports broader participation in sukuk and related instruments. The discipline embedded in sharia frameworks aligns closely with the transparency and risk-mitigation expectations of both domestic and international investors. As interest in sustainability-linked products grows, sharia-compliant structures can further broaden the issuer base by combining ethical financing principles with emerging environmental, social and governance (ESG) standards. Although ESG adoption in Saudi Arabia is still in its early stages, rising policy attention and global trends are expected to accelerate its integration into financial products. NBFIs can support this shift by embedding ESG considerations into their internal frameworks and developing transparent, well-structured instruments aligned with sustainability objectives.
Which challenges and opportunities lie in integrating microfinance and alternative lending into a maturing capital markets ecosystem?
AL SHARIF: As the range of well-structured financial products expands, the Saudi capital market becomes increasingly attractive to foreign investors. Recent regulatory changes enabling broader foreign participation have deepened the market, though capital-flow volatility remains a potential challenge, as observed in other emerging economies. For foreign direct investment, the Kingdom’s stable macroeconomic environment and consistent policy direction create favourable conditions. International investors often require access to local financing channels as they scale operations, and a deep, transparent capital market can meet this need while drawing in additional long-term investors. Comparative performance also strengthens the Kingdom’s appeal. Over the past decade, Saudi Arabia has frequently delivered returns that outpaced major global markets, and recent IMF assessments highlight the robustness of its economic trajectory, reinforcing investor confidence.
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